The National Bank of Georgia (NBG) has raised its key refinancing rate by 50 basis points to 8%. The decision was made at the meeting of the NBG Monetary Policy Committee (MPC) on December 16.
National Bank of Georgia increases refinancing rate again
By Tea Mariamidze
Friday, December 18
For now, the rate of monetary policy is 8%, which was 4% at the beginning of the year and increased up to 4.5% in February, later increased to 5% in May, to 5.5% in July, to 6% in August, to 7% in September and 7.5% in November. This is the eighth intervention carried out by the National Bank this year.
A Non-governmental Organization (NGO), Society and the Banks, says that 8564 people will see an increased interest rate on their loans.
According to the NBG, the monetary policy decision is based on the macroeconomic forecast, according to which the National Bank continues the monetary policy tightening in response to increased inflation expectations.
The NBG has released a statement saying that the main factors causing the inflation growth are exchange rate depreciation and higher prices on certain imported goods, also the increase in the electricity tariff.
The statement also reads that there have been some positive developments in relation to the elimination of external imbalance. Moreover, in the last three months, imports have decreased by 18 percent so the impact of the existing external shock on the exchange rate has been exhausted.
According to the NBG, further monetary tightening in the coming periods is not expected unless additional shocks hit the market.
“We will continue to monitor the developments in the economy and financial markets and will use all means and instruments at its disposal in order to ensure the price stability. Further changes in the monetary policy will depend on the inflation forecast and factors affecting it, such as the global and regional economic environment, and general economic conditions,” says the National Bank.
The Monetary Policy Committee will hold its next meeting on February 3, 2016.